Mercury Insurance 2015 Annual Report Download - page 52

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40
The following tables present the components of net realized investment (losses) gains included in net income:
Year Ended December 31, 2015
(Losses) Gains Recognized in Income
Sales
Changes in fair
value Total
(Amounts in thousands)
Net realized investment (losses) gains:
Fixed maturity securities (1)(2) $ 136 $ (39,304)$ (39,168)
Equity securities (1)(3) (17,459)(22,988)(40,447)
Short-term investments (1) (1,396) 561 (835)
Total return swaps 1,062 (7,500)(6,438)
Options sold 3,021 60 3,081
Total $(14,636)$ (69,171)$ (83,807)
Year Ended December 31, 2014
Gains (Losses) Recognized in Income
Sales
Changes in fair
value Total
(Amounts in thousands)
Net realized investment gains (losses):
Fixed maturity securities (1)(2) $(2,719) $ 77,208 $ 74,489
Equity securities (1) 41,637 (32,922) 8,715
Short-term investments (1) (1,943)(527)(2,470)
Total return swap 2,706 (5,675)(2,969)
Options sold 3,394 25 3,419
Total $ 43,075 $ 38,109 $ 81,184
__________
(1) The changes in fair value of the investment portfolio result from the application of the fair value option.
(2) The Company’s municipal bond holdings represent the majority of the fixed maturity portfolio. The fair values in 2015
were adversely affected by the increase in market interest rates in 2015. The fair value increases in 2014 were primarily
caused by the overall improvement in the municipal bond market.
(3) In 2015, the decreases in the fair value of equity securities were primarily due to a decline in the value of the Company's
holdings in industrial stocks. Prior to the fourth quarter of 2014, the Company realized gains by selling equity securities.
During the fourth quarter of 2014, decreases in the fair value of equity securities were primarily due to a decline in the
value of the Company's holdings in energy stocks.